LT - Larsen & Toubro

📊 NSE: LT 🏢 Engineering - Turnkey Services 📅 Last Updated: 12/14/2025 9:11

💰 Financial Performance

Revenue Growth by Segment

Group revenue grew 10% YoY to INR 68,000 Cr (Rs 680 Bn) in Q2 FY26. Segment growth: Energy Projects grew 48% (INR 13,082 Cr), Hi-Tech Manufacturing grew 33% (INR 2,754 Cr), IT & Technology Services grew 13% (INR 13,274 Cr), and Financial Services grew 9% (INR 4,166 Cr). Infrastructure Projects revenue was subdued/flat at INR 31,759 Cr, while Others (Realty/CE) declined 14% to INR 1,420 Cr.

Geographic Revenue Split

International revenue contributed 56% (INR 38,080 Cr) of total revenue in Q2 FY26, up from 52% in Q2 FY25. Domestic revenue contributed 44% (INR 29,920 Cr). For H1 FY26, international revenue was 54% of the total.

Profitability Margins

Group EBITDA margin was 10.0% in Q2 FY26, down 30 bps from 10.3% YoY. Net Profit (PAT) grew 16% YoY to INR 3,900 Cr (Rs 39 Bn). Return on Equity (ROE) improved 110 bps to 17.2% on a trailing 12-month basis.

EBITDA Margin

Group EBITDA margin is 10.0%. Segment EBITDA margins: Hi-Tech Manufacturing 14.7% (up 190 bps), Infrastructure 6.3% (up 30 bps), IT & TS 20.2% (down 80 bps), and Energy Projects 7.3% (down 160 bps). The Projects & Manufacturing (P&M) portfolio margin improved to 7.8% from 7.6% YoY.

Capital Expenditure

Net investment in fixed assets (including intangibles and investment property) for H1 FY26 was INR 2,430 Cr (Rs 24.3 Bn), a significant increase from INR 1,410 Cr in H1 FY25.

Credit Rating & Borrowing

L&T secured a USD 700 million sustainability-linked facility from a commercial bank. Group finance costs decreased 14% YoY to INR 760 Cr (Rs 7.6 Bn) in Q2 FY26 due to lower rates and average borrowing levels at the Parent company.

⚙️ Operational Drivers

Raw Materials

Manufacturing, Construction and Operating (MCO) expenses represent 64.1% of revenue (INR 43,590 Cr). Staff costs represent 19.1% of revenue (INR 12,990 Cr). Specific materials include steel, cement, and specialized components for EPC and Hi-Tech Manufacturing.

Import Sources

Not specifically disclosed, but 49% of the order book is international, primarily sourced for projects in the Middle East and India.

Key Suppliers

Not disclosed in available documents; however, key clients include National Oil Companies (NOCs) in the Middle East.

Capacity Expansion

The Order Book expanded 31% YoY to INR 667,041 Cr (Rs 6.67 trillion) as of September 2025, providing strong revenue visibility. Precision Engineering prospects are valued at INR 25,100 Cr.

Raw Material Costs

MCO expenses grew 10% YoY to INR 43,590 Cr, strictly in line with activity levels. Procurement strategies focus on managing international project execution and cost overruns in domestic hydrocarbon projects.

Manufacturing Efficiency

Operational efficiencies aided margin improvement in Heavy Engineering. Precision Engineering margins (PES) were lower due to a larger share of early-stage jobs and development project costs.

Logistics & Distribution

Not disclosed as a specific percentage of revenue; however, SG&A expenses (INR 2,900 Cr) were reflective of increased operations and forex variations.

📈 Strategic Growth

Expected Growth Rate

15%

Growth Strategy

Growth will be driven by a ramp-up in execution during H2 FY26, which is seasonally busier for Infrastructure. The strategy includes securing 'ultra-mega' hydrocarbon opportunities in the Middle East, capitalizing on a INR 10.4 trillion prospect pipeline, and achieving 98% retailization in the Financial Services loan book. Newly incubated businesses in Semiconductor design, Data Centers, and Digital Platforms are also expected to scale.

Products & Services

EPC projects for Infrastructure and Energy, Hydrocarbon plants, Precision Engineering systems, Heavy Engineering equipment, Residential and Commercial Realty units, and Retail Financial Loans.

Brand Portfolio

L&T, LTIMindtree, LTTS, L&T Finance, Nabha Power, CarbonLite Solutions.

New Products/Services

CarbonLite Solutions (CLS) for sustainable energy, Semiconductor design, Data Centers, and Digital Platforms. CLS revenue growth is reflective of a higher order book.

Market Expansion

Expansion is focused on the Middle East for Hydrocarbon projects and the Indian private sector for high-tech manufacturing facilities (Semiconductor fabs, Solar PV plants).

Market Share & Ranking

Not disclosed as a specific percentage, but the company is pursuing 'ultra-mega' opportunities, indicating a dominant market position in EPC.

Strategic Alliances

In-principle understanding with the Government of Telangana for the takeover of debt and equity of L&T Metro Rail Hyderabad SPV. JV/Associates PAT share was a loss of INR 10 Cr in Q2 FY26.

🌍 External Factors

Industry Trends

The industry is shifting toward sustainable energy (CarbonLite) and private sector demand for high-tech infrastructure (Data Centers, fabs). L&T is positioning for this via its 'Lakshya 2026' plan and new business incubations.

Competitive Landscape

Faces domestic and international competition in EPC. Energy segment margins are currently impacted by 'competitively priced' projects nearing completion.

Competitive Moat

Moat is sustained by a massive INR 6.67 trillion order book, a robust risk management system, and cost leadership through capital efficiency (10.2% NWC/Sales). Diversification across P&M and Services provides a hedge against sector-specific cycles.

Macro Economic Sensitivity

Sensitive to Indian GDP growth, fiscal deficits, and economic growth in target export countries. Interest rate prevailing in the economy affects fiscal costs.

Consumer Behavior

Shift toward retail loans in the Financial Services segment, achieving 98% retailization ahead of 2026 targets.

Geopolitical Risks

High exposure to the Middle East (49% of order book). Geopolitics are interrogated internally to manage risk exposure.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to government policies, fiscal deficits, and investment regulations in India and international target countries.

Environmental Compliance

Sustainability-linked facility of USD 700 million is tied to KPIs for GHG emission intensity and freshwater withdrawal.

Taxation Policy Impact

Tax expense for Q2 FY26 was INR 1,650 Cr (Rs 16.5 Bn), representing a 14% increase YoY.

Legal Contingencies

A litigation-related provision in respect of Nabha Power impacted the Development Projects segment margin in Q2 FY26. Total JV/Associate PAT share was INR -10 Cr.

⚠️ Risk Analysis

Key Uncertainties

3% of the total order book is classified as slow-moving. Cost overruns in Energy projects nearing completion are expected to persist in the near term.